Electoral Trusts: How some of India’s biggest companies route money to political parties

Published 14 April, 2017 | Updated 18 August, 2017

In recent years, electoral trust companies have emerged as a major source of funding for political parties. For the corporations that finance them, electoral trusts give an impression of an arms-length transaction, creating a buffer that allows companies to give money to parties without appearing to favour one over the other.

Between April 1, 2013, and March 31, 2016, donations from seven electoral trusts amounted to more than Rs 442 crore — about one third of all the funding disclosed by political parties in that time period.

NOTES: This chart shows contributions to and expenditures by electoral trusts from April 1, 2013 until March 31, 2016. General Electoral Trust’s contribution reports are not publicly available.

Some of the country’s largest and most influential corporate conglomerates — from Bharti to Tata — contribute to these trusts. Together, they represent a broad swathe of corporate India invested in highly regulated sectors where seemingly minor changes in policy can have a disproportionate impact on balance sheets.

By looking at disclosure reports filed with the Election Commission of India, it is possible to trace the path by which money travels from companies through trusts to political parties. But that may be about to change.

Finance Bill 2017 has introduced a new financial instrument called an “electoral bond”, issued by the Reserve Bank of India, which can be bought and deposited in the account of a political party without disclosing the donor’s identity. As corporates switch to electoral bonds, trusts may fall out of use.

The government claims these changes will make political funding more transparent — a claim echoed by India’s corporate honchos, who insist anonymity is essential to guard against India’s “vindictive” political culture in which parties could penalise donors for funding rival political forces.

Yet those who criticize the electoral trust system as being too opaque believe the electoral bond system will be even more inscrutable. “It’s introducing additional opacity in the finances of political parties,” said Lakshmi Sriram of the Association for Democratic Reforms, a government watchdog group. “It’s really bad.”